Subdued steel price affecting margins: RINL

State-run steel maker Rashtriya Ispat Nigam (RINL) today said despite rise in sales, subdued prices of the metal have continued to exert pressure on margins.

"The pressure on price, as the market continues to be sluggish is causing strain on the profit margins," a company official said, adding that the company has initiated concerted efforts to reduce production cost for improving realisation.

Domestic steel makers were facing subdued sales during most part of the current financial year, which prevented them to jack up the prices.

But seeing pick-up in demand following festive season, most of them hiked prices in December and January, mainly to align with imported cost of steel. RINL also raised the prices by Rs 1,000 a tonne in these two months.

Meanwhile, RINL has contracted coking coal from its Australian suppliers cheaper by up to $7 (around Rs 370) a tonne for the current quarter over the previous one. This will give the company some relief on the margin front.

An Empowered Joint Committee, which sets prices on quarterly basis for the company, has fixed the rate at $161 per tonne for hard coking coal and $138 a tonne for soft coking coal for the current quarter.

The source said RINL's sales in January rose to 2.8 lakh tonnes, which is 13% more than the sales it recorded n December, 2012.

"The sales volume of 2.8 lakh tonnes and sale turnover of Rs 1,260 crore are the best achieved in the current financial year," it added.

RINL produced 2.59 lakh tonnes finished steel in January, up over three% compared to the production in the same month last year.